Key takeaways
- Economic conditions at career entry shape long-term professional behavior
- Advisors who start during recessions have better track records
- Recessions lead to more selective entry into the profession
- Early career experiences create lasting imprints on professional conduct
- The "recession cohort" effect persists throughout careers
Career imprinting
When you start your career matters. We examine how economic conditions at the time of entering the financial advisory profession affect long-term behavior.
Recessions change who enters the profession and how they behave. During downturns, fewer people become financial advisors. Those who do enter are more committed and face tougher screening.
What we found
Advisors who begin their careers during recessions are significantly less likely to commit professional misconduct. This effect is not temporary. It persists throughout their careers.
The recession experience creates a lasting imprint. Early-career hardship appears to instill greater caution, professionalism, or ethical awareness.
Implications
For investors: consider when your advisor entered the profession. For regulators: economic conditions affect the quality of the professional workforce in ways that persist for decades. For the profession: early career experiences matter more than we might assume.
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